Five Common Retirement Fears and How to Overcome Them

A man looking fearful looks over the top of a cubicle wall in an office.

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If we’re to believe everything we see in magazine and TV ads, retirement is a time of leisurely bike rides with your spouse, lunching with friends and exploring hobbies like painting or ceramics, all done in joyful contemplation. But the realists among us might rightly have their doubts — suspecting that behind these idyllic images, there could be boredom, financial worry or even depression.

My experience with clients nearing retirement confirms such suspicions. While many are eager to leave the 9-to-5 behind, they’re uncertain about what comes next. For better or worse, work gives shape to our lives, prompting us to wake up each morning, make ourselves presentable and get along with people. It’s also a source of income and, for many, a means of accessing health insurance. Once that structure vanishes, the responsibility falls on you to re-create it for yourself.

No wonder fears creep in. But with some proactive planning, it’s possible to navigate these uncertainties and craft a rewarding retirement.

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Fear #1: Battling boredom.

Boredom is one of the biggest concerns I hear from my clients, particularly among those who’ve had successful careers and derive a big part of their identities and community from work. Often, these clients are thinking only about what they'll be retiring from, not what they'll be retiring to.

For retirement to be successful, it's important to know how you'll spend your time — and it can't be something vague, like "relaxing" or "golf." You need more concrete retirement plans that have you interacting with other people and make you feel valuable. Think along the lines of: "I plan to volunteer 10 hours a week with my local soup kitchen, take a conversational French class, play pickleball three times a week and meet up with friends for coffee twice a week." These are specific plans that keep your mind and body active and create community.

Think of retirement as an opportunity to explore passions and interests that were previously put on hold. If you’ve got math and science chops, consider volunteering as an adviser for your local high school robotics team. If you’re an avid baker, consider getting a part-time job at a bakery.

There are so many possibilities for what you can do in retirement that will motivate you to jump out of bed each morning.

Fear #2: Running out of money.

With today’s higher life expectancies and continually increasing health care costs, the fear of outliving one’s savings is common. This can prompt retirees to be extra cautious about their spending, preventing them from truly enjoying retirement.

Address this fear head on with planning. A financial adviser can help you create portfolio strategies to shore up your savings, such as diversifying your investments to reduce market risk or including fixed income annuities to create a guaranteed stream of income and act as a safety net against market volatility. They can also help you create a well-crafted retirement budget so you know what you can and cannot afford.

Fear #3: Navigating health insurance.

If you retire before age 65, you’ll need to figure out how to get health insurance coverage before Medicare kicks in. Transitioning from employer-provided health coverage to Medicare also requires careful planning. Medicare is complicated and has many options and different coverage levels. It’s easy to get overwhelmed and worry that you’re not making the best choice for yourself.

First, educate yourself about Medicare, so you can learn some of the basics about how it works and what it costs. In general, Medicare Part A provides coverage for inpatient hospital care. To get coverage for doctor’s visits and outpatient care, you need Medicare Part B. You can also buy supplemental plans called Medigap coverage. For prescription drug coverage, you’ll also need a Medicare Part D plan.

I advise my clients to buy as much coverage as they need and can afford. You don’t want to get stuck in a plan that doesn’t cover your medical needs.

Fear #4: Transitioning from savings to income.

The shift from accumulating savings to generating a steady income source can be intimidating for many retirees. Pay careful attention to timing. A bear market in the first few years of your retirement impacts how long your money will last because of a financial concept known as sequence of returns. Poor investment returns early in retirement, when you first begin making withdrawals, can deplete your portfolio faster than if you are taking money when your balance is up. A bear market later in retirement, after your portfolio has had time to grow, won’t have as much impact.

For my clients approaching retirement, I recommend they set aside a few years’ worth of income in a no-risk, highly liquid account. This way, if the market is down, they can use their cash and allow their investment portfolio to recover. Another option is to work longer and wait for the market to recover — although that might not be an option if you experience a layoff or poor health.

Fear #5: Managing new family dynamics.

For some, the idea of spending more time with their spouse in retirement may create some anxiety. In all your years of marriage, you’ve probably never spent 24/7 together except for vacations and holidays. Being around the same person all the time will require adjustment, for sure.

The key is open communication about how this will go. It doesn’t have to be adversarial or confrontational. Explain to your spouse that you’re nervous about how retirement will impact your relationship because spending so much time together will be new. You might have a list of some activities you’ll want to do together, but it’s also important to have space to foster your own interests and friendships.

Embrace this new chapter

It’s natural to feel fearful of the unknown, and retirement is an unknown. While it can be accompanied by excitement, there's also uncertainty. Acknowledge your worries, but don't let them stop you from making retirement as fulfilling as it can be. Start by making a list of all your fears, then break each one down into steps you can take to reduce those fears.

By taking control, you can transform retirement from a fearful unknown into an exciting new chapter full of possibilities.

Securities offered through Cetera Advisor Networks LLC, Member FINRA/SIPC. Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Cetera Advisor Networks LLC is under separate ownership from any other named entity. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors, address 14600 Branch St. Omaha, NE 68154. Erin is a non-registered associate of Cetera Advisor Networks LLC.     

The opinions contained in this material are those of the author, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Advisor Networks LLC cannot guarantee or represent that it is accurate or complete. 

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Erin Wood has over two decades of experience humanizing financial planning. As SVP of Advanced Planning at AssetMark, Erin leads innovation for new wealth solutions, secures strategic industry relationships and oversees a team of specialists who work directly with advisers and their high-net-worth clients. Erin focuses on delivering tailored strategies for estate planning, tax efficiency, retirement planning and multigenerational wealth transfer to help financial advisers keep up with evolving client demands.